Macro Afternoon

By in Australian Dollar, Australian Shares

| 105 comments

See the latest Australian dollar analysis here:

Australian dollar dislocates from greenback amid dirt frenzy

A sea of red out there on Asian stock markets in response to the largish falls on Wall Street overnight from a crazy short squeeze as the professionals (sic) continue to clutch their pearls as Redditors and Robinhooders go after their next target. USD is definitely King Dollar at the moment, with gold and silver pushed lower, while Yen and Aussie are suffering even more. Bitcoin still can’t get out of its Friday night breakdown phase, deflating to the $31K level before a very small recovery during the afternoon session, but still on a downtrend:

The Shanghai Composite has fallen over 1% alongside other Asian stocks, currently at 3528 going into the close, while in Hong Kong the Hang Seng Index has pushed sharply lower, down nearly 2%, currently at 28775 points. Japanese markets are also struggling with the risk off activities, with the Nikkei 225 finishing 1.2% lower at 28270 points while the USDJPY pair continued its surge from last night to make a new two week high and bursting through the 104 handle:

The ASX200 was the worst off, falling 1.9% to close at 6649 points, not helped at all by the Australian dollar which slumped below the 77 handle and kept going into a very oversold position at 76.30 going into the European session, making a new low for the year:

Eurostoxx and S&P futures are trying to stabilise here going into the European open, with the four hourly chart of the S&P500 showing that break of the post-Biden election trendline, after briefly touching the 3700 point level overnight. Are we going to see wider selloffs tonight?:

The economic calendar continues with German inflation and the 4Q GDP print and weekly initial jobless claims for the US.

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Comments

    • robert2013

      Thanks for sharing.

      “Redditors noticed what was going on and have royally fed short sellers.”

      I just joined r/WallStreetBets .

      • Stephen Morris

        I was just being cynical about the way in which people sometimes appear to become more (not less) committed to their beliefs when confronted with disconfirmatory information:

        https://en.wikipedia.org/wiki/Disconfirmed_expectancy

        I might add that those who supported Brexit did so for reasons which were vaguer and therefore more difficult to disconfirm in the first place.

        Those who opposed Brexit cited particular outcomes, such as reduced economic growth (especially relative to the EU), or even – in extreme cases – a collapse of the economy.

        It is much easier to disconfirm an expectation of GDP growth (in the case of opponents) than it is to disconfirm an expectation of the vague benefits of sovereignty (in the case of supporters).

        Of course, supporters such as AE-P are enjoying themselves at the moment as the centralised EU vaccine-procurement program fails to deliver as expected.

        • maddz

          Classic centrist. Suspended in mid-air making arguments. What’s ‘vague’ about the benefits of sovereignty? I like making decisions for myself. And no. It wasn’t the only reason.
          If UK does achieve higher gdp growth, it is not relevant to the core push for Brexit. It does proves the Remain case was ‘vague’ and not proven.

          • Stephen Morris

            That’s the precise argument I was making.

            If UK does achieve higher gdp growth it will strongly disconfirm the Remainers’ belief because their predictions were relatively precise.

            On the other hand, there is no specific outcome (other the than complete collapse of Britain perhaps) which could disconfirm the Leavers’ belief. How does one disconfirm a belief in the “benefits of sovereignty”? If one likes “making decisions for oneself”, what possible information could show that such a preference was “wrong”?

            If you read the comment again, carefully, you will see that there’s nothing in it to suggest that I am a “centrist”.

          • maddz

            I don’t agree sovereignty is a vague argument. It is critical with practical consequences though they may take time to work out.

            The system of governance and that it functions as intended is important. No point in a Westminster system without MPs taking responsibility with clear accountability for outcomes. Deferring to EU parliament is not democratic.
            US has similar parallels where the Legislative Houses abandoning their role in making sound laws, and Members live lives doing the opposite of what they say the country should do – and recklessly politicising appointees of the SCOTUS so the decisions of the court will ‘move the country’ instead. And a series of US Presidents have done major decisions by Executive Order, instead of negotiating with Congress.

            If you weren’t implying yourself a centrist as what I read it as, I can only take it I’ve misread who you are implying is a ‘true believer’.

          • Stephen Morris

            I was suggesting that the True Believers are those who opposed Brexit.

            The vaccine procurement fiasco threats to disconfirm their belief that Brexit would be bad for Britain because it provides an example of where Britain has performed better than the EU. There is even a possibility that UK GDP will grow faster than EU GDP in 2021, which would positively disconfirm a specific anti-Brexit prophesy..

            In line with the cynical principle that disconfirmation actually increases (not decreases) fervour and proselytizing, I was suggesting that opponents of Brexit will now become even more hostile to it.

            Already we’re seeing attempts to re-frame the debate, with opponents starting to argue in moral terms that Britain “ought” to give its vaccines to the EU.

            By why the EU? Why not Tanzania? Why not Paraguay? Why does the EU have a greater moral entitlement to scarce vaccines that other countries.

            In a similar vein The Age this morning (in a veiled attack on Britain) offered up an editorial of platitudinous blancmange condemning vaccine “nationalism” and arguing that everyone should share. But if there are more people than vaccine doses, who’s to go without? It’s all very well to say that everyone should be nice to one another, but it doesn’t actually address the problem of have to distribute this scarce commodity.

  4. NoodlesRomanovMEMBER

    Can someone join the dots for me on why the WSB/GME issue would drag entire index’s down?

    • DingwallMEMBER

      When Reddit loons act like lemmings, would that not suggest the market is smelly and due for a settle down?

      This might give some insight
      https://www.bloomberg.com/news/articles/2021-01-28/cohen-sundheim-lose-billions-to-reddit-traders-running-amok

      The struggles at some of the biggest hedge funds may have contributed to Wednesday’s 2.6% drop in the S&P 500, its worst decline since October. One theory behind the decline is that funds are selling long bets to get the cash they need to cover their shorts.

      • NoodlesRomanovMEMBER

        Thanks Dinger – there was a lot of commentary about ‘the market closing down because of an internet chat room fighting a hedge fund’ but no explanation of what the connection is (until your link).

        • DingwallMEMBER

          CB talked about the short-covering in Macro Morning …. probably a continuation of a number of threads mentioning hedge funds/GME over a day or two.

          Wall Street’s wobble in the previous session has turned into a full rout overnight with short-exposed hedge funds tipping the major bourses deep into the red.

      • NikoMEMBER

        Will be interesting if markets fall as much or more tonight as they did last night. Then margin calls will amplify the falls on Friday night.

    • RomulusMEMBER

      Lot of hedge funds are long/short. Some are getting killed on their shorts so they have to liquidate their longs asap.

        • Mining BoganMEMBER

          Well, a few Twitter types with hurt feelings and even hurtier wallets say the reddit types are clad just in underwear in their mother’s basement.

          • ColinMEMBER

            Yes. The milking’s only supposed to go one way & Reddits should stay in their basements – naked & starving if possible.

    • russbwMEMBER

      all of what others say plus, in this derisking environment with a lack of puts or puts being sold as compared to calls, and IV shot up possibly due to some liquidation, it’s possible that many puts have been bought as protection. This could lead to dealer delta hedging or shorting futures. This dynamic can shift quickly in either direction. Right now it looks dicey but as of this morning calls were still relatively high to puts but if there is continued derisking, then chances are more people will buy puts and it could feed on itself. There seems to be some rebuttal from Robinhood closing transactions on options only for GME and AMC as of 29/1. It seems like the brokers are reigning it in (IB as well) but nothing about buying the stocks yet. Margin debt has shot up as well, this could add fuel to a derisking if it occurs. Vix positioning to low levels was highest since 2015 ie vix up now, that will be one to watch. That’s my basic understanding of the gamma/options/vix issue at the moment. I suppose but I don’t know, if everyone decides to derisk at once and sell stocks, that could be enough to feed it. *Edit, if Melvin or (rumour) Citadel, or other hedgies liquidate something to fund the GME short position what they liquidate is part of the issue, if it’s s and p for instance

    • Matchbox

      It doesn’t directly. The feeding frenzy signifies the market top so investors are concerned that this is the blow off; The total disregard for any fundamentals or risks in a huge euphoric buying spree. Its not just GME, micro cap stocks are going up one by one as people start fishing out cheap stocks that have not broken out.

  5. Poochie the Rockin DogMEMBER

    When I read about Reddit taking on hedge funds I was psyched because i thought it was going to be like occupy wall street but actually have an effect. But in the wsb thread it seems like it’s not so much about destroying the establishment as it is about getting rich – the same thing happened with Bitcoin, so this isn’t something that’s really new. I have all my savings in Amazon stock – but I’d trade it all to see wall street burn and the complete dismantling of our corrupt financial system. Sadly I don’t think this is it.

    • footsore

      It seems that the GameStop action has turned into an Us vs Them event. Otherwise it is about getting rich so that you don’t have to put up with all the crap that goes with being poor. It’s very cryptoesque.

    • Matchbox

      It’s the US; ‘Get rich or die trying’ is the slogan on the hat.
      You need a lot of suckers to jump on board though to pump it up and sell into.
      They actually convinced people to hold forever and never sell.
      I mean what do people think the end goal is here?

      • Poochie the Rockin DogMEMBER

        Yeah it’s split between people convincing others to hold and others asking when do we all sell? As if it’s possible for everyone to exit at the top, not to mention fake ‘we’re all in this together’ when the smarter ones know that is most definitely not the case

          • RobotSenseiMEMBER

            Biol101 lectures – “The good of the individual outweighs the good of the species”.

            There’ll be some sweaty trigger fingers when the market reopens.

      • Australia Day 2021

        “It’s the US; ‘Get rich or die trying’ is the slogan on the hat.;

        Remind me again what country has the highest house prices in the world?

      • Jumping jack flash

        Yes,

        Classic pump and dump and very cleverly marketed to people who want to “make wall st pay”.

        Antiestablishmentarianism is the name of the game. GenZ seem to revel in it. Easy pickings.

        Using reddit as well. Genius.

        • The Traveling Wilbur

          I’m sure it just morphed into being in a very nonauthoritative, organically non-establishment and respectful way following some form of societal non violent protest gathering.

          *cough*

          At least they’ll be able to bake muffins with each other when this is all over. So there’s that. (the ones that have some money left will anyway)

        • FUDINTHENUDMEMBER

          Hmm I seen plenty of “managing sentiment” in the past on reddit pages for crypto, especially the 2017 bubble when I was onto it a bit more. Similar on hotcopper ect. Most of these “Robinhooders” will get smoked. Unless the new generations have evolved super amazing trading discipline and control of their emotions and cognitive biases, the market’s still gonna eat the majority of them up in the next few months of Volatility.

  9. master of toilet paper

    who here also sick the f of american sh1t being on tv and in our news media all the time

    they should rename the the ABC the ABC cuz its not the astralian broadcasting corporation its the american broadcasting corporation

    america is a hole

    • Australia Day 2021

      They’re utterly obsessed with what’s going on in a country on the other side of the planet.

      • master of toilet paper

        why are so many aussies like this now

        they caer more about yankee stuff and import that trash here, like at the BLM protests we had here last june etc

        is there anything more cringe than ppl who would prob perceive themselves as “anti-imperialists” acting like browbeaten subjects of a far-flung suzerainty of the global american empire

        the irony is lost on these clowns

        • ColinMEMBER

          We like to feel superior by pointing out the problems over there rather than look in the mirror. Also a convenient distraction that’s exploited & amplified by our comptrollers to get eyes off our sellouts shenanigans. And of course anyone feeling slighted here will get ideas…….

          Were the bought off mouthpieces turned down we’d have to look at ourselves.

        • Jumping jack flash

          Americans are natural entertainers. This is entertainment. They can’t help but turn everything including their own country into some kind of reality TV show.

        • NikoMEMBER

          Once I asked someone who went to BLM march here in Sydney how many times he marched for all those Aboriginals that died in custody over the years – you should have seen the look on his face. lol

  13. NikoMEMBER

    got my BBUS sold by trailing sell I set too tight. By the time I came to conclusion to keep them was too late. Bought few again but the thrill is gone..

      • NikoMEMBER

        While aware of the risks their current mines present, I bought into WSA as I am sure future operations will deliver. When they announced issues share price fell sharply and I was buying the dip knowing it was oversold at ~1.80 while my valuations were around $2.10.
        When they got to $2 I sold with small loss as I was afraid share price may fall again as I did expect the issue reported will linger for longer than they reported. Then I watched in disbelief share price hitting $3. Never underestimate the amount of s1up1d in the market. I always do at my own cost.

        What I am trying to say is this should not have come as a surprise and I am not sure what people thought when they pumped the share price over $3.
        I still think they are only worth around $2.20 considering they did advanced Odysseus over the last quarter.

  14. reusachtigeMEMBER

    The media are doing a great job of advertising that there actually is a thing as Victorian Nazis!

  15. Matchbox

    lol… blackrock who manages $51b in hedge funds owned 9.2m shares in GME since december which are now worth $3b. Another major holder was ‘credit acceptance corp’ who is a dodgy subprime lender under investigation and currently Steve Eisman‘s biggest short. Credit acceptance corp bought a 5% stake in GME last year and its holding is worth $1.2b now.
    Perhaps new people jumping on to the reddit WSB gangs crusade need to think this through

    • skippy

      Algos manage and humans data input … maybe we can all one day be like the townsfolk in their server farm village[tm].

      I can dream …

      • The Traveling Wilbur

        Pretty sure it’s been a while since your last decent REM sleep, so not sure you can.

        • skippy

          Gunna has referenced Curtis last doco HyperNormalisation in the past, I’m only pointing out how Aladdin works, with the creepy bit about the town its located in and how as the major employer how the town has changed E.g. the girl say I’m better … were all better … bit …

          Informative that reusa made an appearance, but not surprised at you TTW, landmines and all …

    • The Traveling Wilbur

      There are times when you go to open a link that you reaaaaally hope it’s not the story you think it will be. Sigh.

      On the bright side, you have managed to distribute absolute proof that person is a solid gold idiot. Or a liar desperate for attention on a deeply scarily fundamental (to the psyche) level.

      The latter should be self-explanatory. As to the former: stuff like that happens a LOT, I could reel of multiple instances of personally finding three and a couple of four figure items in often overlooked places. My personal favourite was an antique sterling silver english hallmarked ingot pendant (that need a really good clean). Know WHY you don’t hear about that happening? Because the second you give out the deets you ruin your chances of ever picking up anything else of value from that location ever again. Especially nowadays. Utter moron.

    • BarratuesdaiMEMBER

      Change the working visa status of kiwis in Australia and they’re entire economy will collapse.
      Then they will show more respect to us, politics china style.